Many people who buy life annuities add one or more of these three options:
1. Joint-and-last-survivor option
This option appeals to couples. Payments continue as long as either you or your partner lives. Sometimes you can get higher monthly payments while both partners are alive. After one dies, the payments to the surviving partner go down. The thinking is that one person will need less income than two.
2. Guaranteed benefit
This option guarantees a certain number of payments. For instance, let?s say you choose a 10-year guarantee. What happens if you die before the 10 years are up? Your loved ones or your estate will get the rest of your payments, or they may receive a lump sum of equal value. Of course, if you live past the guarantee period, you will still receive payments for life.
3. Indexed annuity
This option means your income goes up as prices rise. This is important because after five, 10, or 15 years, your monthly income will buy a lot less than it does today.
Choosing the right annuity: Frank and Frances' story
Frank was two months away from retirement when he and his wife Frances sat down to consider their options for an annuity. They decided against an indexed annuity, but were still thinking about adding a guaranteed benefit, and a joint-and-last-survivor option. To see what decision they made and why, read now.
Remember: There are lots of options for annuities today
They may lower the size of your monthly payment, but they may make an annuity work better for you overall.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.